Loans and Allowance for Credit Losses

6 Months Ended

Dec. 31, 2024

Loans and Allowance for Credit Losses

Loans and Allowance for Credit Losses

Note 4:  Loans and Allowance for Credit Losses

Classes of loans are summarized as follows:

(dollars in thousands)	December 31, 2024		June 30, 2024
1-4 residential real estate	$	967,196	$	925,397
Non-owner occupied commercial real estate		882,484		899,770
Owner occupied commercial real estate		435,392		427,476
Multi-family real estate		376,081		384,564
Construction and land development		393,388		290,541
Agriculture real estate		239,912		232,520
Total loans secured by real estate		3,294,453		3,160,268
Commercial and industrial		484,799		450,147
Agriculture production		188,284		175,968
Consumer		56,017		59,671
All other loans		3,628		3,981
Gross loans		4,027,181		3,850,035
Deferred loan fees, net		(202)		(232)
Allowance for credit losses		(54,740)		(52,516)
Net loans	$	3,972,239	$	3,797,287

The Company’s lending activities consist of originating loans secured by mortgages on one- to four-family residences and commercial and agricultural real estate, construction loans on residential and commercial properties, commercial and agricultural business loans and consumer loans. At December 31, 2024, the Bank had purchased participations in 75 loans totaling $220.5 million, as compared to 71 loans totaling $178.5 million at June 30, 2024.

1-4 Residential Real Estate Lending. The Company actively originates loans for the acquisition or refinance of one- to four-family residences. This category includes both fixed-rate and adjustable-rate mortgage (“ARM”) loans amortizing over periods of up to 30 years, and the properties securing such loans may be owner-occupied or non-owner-occupied. Single-family residential loans do not generally exceed 90% of the lower of the appraised value or purchase price of the secured property. Substantially all of the one- to four-family residential mortgage originations in the Company’s portfolio are located within the Company’s primary lending area. General risks related to one- to four-family residential lending include stability of borrower income and collateral values.

Home equity lines of credit (HELOCs) are secured with a deed of trust and are generally issued up to 90% of the appraised or estimated value of the property securing the line of credit, less the outstanding balance on the first mortgage and are typically issued for a term of ten years. Interest rates on HELOCs are generally adjustable. Interest rates are based upon the loan-to-value ratio of the property with better rates given to borrowers with more equity. Risks related to HELOC lending generally include the stability of borrower income and collateral values.

Non-Owner Occupied and Owner Occupied Commercial Real Estate Lending. The Company actively originates loans secured by owner- and non-owner-occupied commercial real estate including single- and multi-tenant retail properties, restaurants, hotels, land (improved and unimproved), nursing homes and other healthcare facilities, warehouses and distribution centers, convenience stores, automobile dealerships and other automotive-related services, and other businesses. These properties are typically owned and operated by borrowers headquartered within the Company’s primary lending area; however, the property may be located outside the Company’s primary lending area. Risks to owner-occupied commercial real estate lending generally include the continued profitable operation of the borrower’s enterprise, as well as general collateral values, and may be heightened by unique, specific uses of the property serving as collateral. Non-owner-occupied commercial real estate lending risks include tenant demand and performance, lease rates, and vacancies, as well as collateral values and borrower leverage. These factors may be influenced by general economic conditions in the region, or in the United States generally.

Most commercial real estate loans originated by the Company generally are based on amortization schedules of up to 25 years with monthly principal and interest payments. Generally, the interest rate received on these loans is fixed for a maturity for up to ten years, with a balloon payment due at maturity. Alternatively, for some loans, the interest rate adjusts at least annually after an initial period up to seven years. The Company typically includes an interest rate “floor” in the loan agreement. Generally, improved commercial real estate loan amounts do not exceed 80% of the lower of the appraised value or the purchase price of the secured property.

Multi-family Real Estate Lending. The Company originates loans secured by multi-family residential properties that are often located outside the Company’s primary lending area but made to borrowers who operate within the Company’s primary market area. The majority of the multi-family residential loans that are originated by the Company are amortized over periods generally up to 25 years, with balloon maturities typically up to ten years. Both fixed and adjustable interest rates are offered and it is typical for the Company to include an interest rate “floor” and “ceiling” in the loan agreement. Generally, multi-family residential loans do not exceed 85% of the lower of the appraised value or purchase price of the secured property. General risks related to multi-family residential lending include rental demand and supply, rental rates, and vacancies, as well as collateral values and borrower leverage.

Construction and Land Development Lending. The Company originates real estate loans secured by property or land that is under construction or development. Construction and land development loans originated by the Company are generally to finance the construction of owner occupied residential real estate, or to finance speculative construction of residential real estate, land development, or owner-operated or non-owner occupied commercial real estate. During construction, these loans typically require monthly interest-only payments, with single-family residential construction loans having maturities ranging from six to twelve months, while multi-family or commercial construction loans typically mature in 12 to 36 months. Once construction is completed, construction loans may be converted to permanent financing with monthly payments using amortization schedules of up to 30 years on residential and generally up to 25

years on commercial real estate. Construction and land development lending risks generally include successful timely and on-budget completion of the project, followed by the sale of the property in the case of land development or non-owner-occupied real estate, or the long-term occupancy of the property by the builder in the case of owner-occupied construction. Changes in real estate values or other economic conditions may impact the ability of a borrower to sell property developed for that purpose.

While the Company typically utilizes relatively short maturity periods to closely monitor the inherent risks associated with construction loans for these loans, weather conditions, change orders, availability of materials and/or labor, and other factors may contribute to the lengthening of a project, thus necessitating the need to renew the construction loan at the balloon maturity. Such extensions are typically executed in incremental three month periods to facilitate project completion. During construction, loans typically require monthly interest only payments which may allow the Company an opportunity to monitor for early signs of financial difficulty should the borrower fail to make a required monthly payment. Additionally, during the construction phase, the Company typically performs interim inspections which further provide the Company an opportunity to assess risk.

Agriculture Production and Agriculture Real Estate Lending. Agriculture production and agriculture real estate loans are generally comprised on seasonal operating lines to farmers to plant crops and term loans to fund the purchase of equipment, farmland, or livestock. This segment of lending includes pastureland and row crop ground. The Company originates substantially all agriculture production and agriculture real estate lending to borrowers headquartered in the Company’s primary lending area. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry developed estimates of farm input costs and expected commodity yields and prices. Agriculture production operating lines are typically written for one year and secured by the crop. Agricultural real estate terms offered usually have amortization schedules of up to 25 years with an 80% loan-to-value ratio, or 30 years with a 75% loan-to-value ratio. Risks to agricultural lending include unique factors such as commodity prices, yields, input costs, and weather, as well as farmland and farm equipment values.

Commercial and Industrial Lending. The Company’s commercial and industrial lending activities encompass loans with a variety of purposes and security, including loans to finance accounts receivable, inventory, equipment and operating lines of credit. The Company offers both fixed and adjustable rate commercial and industrial loans. Generally, commercial loans secured by fixed assets are amortized over periods up to five years. Commercial and industrial lending risk is primarily driven by the borrower’s successful generation of cash flow from their business enterprise sufficient to service debt, and may be influenced by factors specific to the borrower and industry, or by general economic conditions in the region or in the United States generally.

Consumer Lending. The Company offers a variety of secured consumer loans, including home equity, direct and indirect automobile loans, second mortgages, recreational vehicle loans and loans secured by deposits. The Company originates substantially all of its consumer loans in its primary lending area. Usually, consumer loans are originated with fixed rates for terms of up to 66 months, with the exception of home equity lines of credit, which are variable, tied to the prime rate of interest and are for a period of ten years.

Automobile loans originated by the Company include both direct loans and a smaller amount of loans originated by auto dealers. Typically, automobile loans are made for terms of up to 66 months for new and used vehicles. Loans secured by automobiles have fixed rates and are generally made in amounts up to 100% of the purchase price of the vehicle. Risks to automobile and other consumer lending generally include the stability of borrower income and borrower willingness to repay.

Allowance for Credit Losses. The PCL for the three- and six- month periods ended December 31 2024, was $932,000 and $3.1 million, compared to $900,000 and $1.8 million in the same periods of the prior fiscal year. The PCL for the six- month period ended December 31, 2024 was the result of a $2.5 million provision attributable to the ACL for loan balances outstanding, combined with a provision of $569,000 attributable to the allowance for off-balance sheet credit exposures, compared to a $3.5 million provision attributable to the ACL for loan balances outstanding, and a $1.7 million benefit attributable to the allowance for off-balance sheet credit exposures for the same period of the prior fiscal year. The Company has estimated its expected credit losses as of December 31, 2024, under ASC 326-20, and management believes the ACL as of that date was adequate based on that estimate. There remains, however, significant uncertainty as the Federal Reserve has tightened monetary policy to address inflation risks. Qualitative adjustments in

the Company’s ACL model were increased compared to June 30, 2024, due to various factors that are relevant to determining expected collectability of credit. The Company decreased the allowance attributable to classified hotel loans that have been slow to recover from the COVID-19 pandemic due to updated collateral appraisals, which provided a more favorable assessment than the Company’s prior period estimates. Additionally, PCL was required due to loan growth in the first six months of fiscal year 2025. As a percentage of average loans outstanding, the Company recorded net charge offs of 0.02% (annualized) during the six months ended December 31, 2024, as compared to 0.07% for the same period of the prior fiscal year. Specifically, management considered the following primary qualitative items in its estimate of the ACL:

●  economic conditions and projections as provided by the Federal Open Market Committee (FOMC) were utilized in the Company’s estimate at December 31, 2024. Economic factors considered in the projections included national levels of unemployment using the high bound of the FOMC’s central tendency, and national rates of inflation-adjusted growth in the gross domestic product using the low bound of the FOMC’s central tendency. Economic conditions are considered to be a moderate and stable risk factor, relative to June 30, 2024;

● the pace of growth of the Company’s loan portfolio, exclusive of acquisitions, relative to overall economic growth. This measure is considered to be a moderate and slightly decreasing risk factor, relative to June 30, 2024;

● levels and trends for loan delinquencies nationally and in the region. This is considered to be a low and stable risk factor, relative to June 30, 2024;

● quantified supported model adjustments and general imprecision adjustments. This factor was added for the June 30, 2024, ACL estimate as certain model adjustments capture highly specific issues or events that are not adequately captured in model outcomes. General imprecision adjustments address other sources of imprecision that are not specifically identifiable or quantifiable to a particular loan portfolio and have not been captured by the model or by a specific model adjustment. The Company considers general imprecision in three dimensions; economic forecast imprecision, model imprecision, and process imprecision.

PCD Loans. In connection with the acquisition of Citizens Bancshares Co. (Citizens) on January 20, 2023, and Fortune Financial Corporation (Fortune) on February 25, 2022, the Company acquired loans both with and without evidence of credit quality deterioration since origination. Acquired loans are recorded at their fair value at the time of acquisition with no carryover from the acquired institution’s previously recorded allowance for loan and lease losses. Acquired loans are accounted for under ASC 326, Financial Instruments – Credit Losses.

The fair value of acquired loans recorded at the time of acquisition is based upon several factors, including the timing and payment of expected cash flows, as adjusted for estimated credit losses and prepayments, and then discounting these cash flows using comparable market rates. The resulting fair value adjustment is recorded in the form of a premium or discount to the unpaid principal balance of the respective loans. As it relates to acquired loans that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination, the net premium or net discount is adjusted to reflect the Company’s allowance for credit losses recorded for PCD loans at the time of acquisition, and the remaining fair value adjustment is accreted or amortized into interest income over the remaining life of the respective loans. As it relates to loans not classified as PCD (non-PCD) loans, the credit loss and yield components of their fair value adjustment are aggregated, and the resulting net premium or net discount is accreted or amortized into interest income over the remaining life of the respective loans. The Company records an ACL for non-PCD loans at the time of acquisition through provision expense, and therefore, no further adjustments are made to the net premium or net discount for non-PCD loans.

The following tables present the balance in the ACL based on portfolio segment as of December 31, 2024 and 2023, and activity in the ACL for the three- and six- month periods ended December 31, 2024 and 2023:

	At period end and for the six months ended December 31, 2024
	Balance		Provision						Balance
	beginning		(benefit) charged		Losses				end
(dollars in thousands)	of period		to expense		charged off		Recoveries		of period
Allowance for credit losses on loans:
1-4 residential real estate	$	10,528	$	2,140	$	(50)	$	46	$	12,664
Non-owner occupied commercial real estate		19,055		(5,395)		—		—		13,660
Owner occupied commercial real estate		4,815		1,014		(122)		—		5,707
Multi-family real estate		5,447		231		—		47		5,725
Construction and land development		2,901		1,817		(1)		—		4,717
Agriculture real estate		2,107		410		—		—		2,517
Commercial and industrial		6,233		1,858		(65)		37		8,063
Agriculture production		835		225		—		—		1,060
Consumer		578		215		(201)		11		603
All other loans		17		7		—		—		24
Total	$	52,516	$	2,522	$	(439)	$	141	$	54,740

	At period end and for the three months ended December 31, 2024
	Balance		Provision						Balance
	beginning		(benefit) charged		Losses				end
(dollars in thousands)	of period		to expense		charged off		Recoveries		of period
Allowance for credit losses on loans:
1-4 residential real estate	$	10,637	$	1,983	$	(2)	$	46	$	12,664
Non-owner occupied commercial real estate		20,728		(7,068)		—		—		13,660
Owner occupied commercial real estate		4,814		1,015		(122)		—		5,707
Multi-family real estate		5,118		607		—		—		5,725
Construction and land development		3,675		1,043		(1)		—		4,717
Agriculture real estate		2,027		490		—		—		2,517
Commercial and industrial		6,114		1,943		(26)		32		8,063
Agriculture production		784		276		—		—		1,060
Consumer		526		202		(129)		4		603
All other loans		14		10		—		—		24
Total	$	54,437	$	501	$	(280)	$	82	$	54,740

	At period end and for the six months ended December 31, 2023
	Balance		Provision						Balance
	beginning		(benefit) charged		Losses				end
(dollars in thousands)	of period		to expense		charged off		Recoveries		of period
Allowance for credit losses on loans:
1-4 residential real estate	$	9,474	$	108	$	(41)	$	33	$	9,574
Non-owner occupied commercial real estate		13,863		3,232		(496)		—		16,599
Owner occupied commercial real estate		5,168		(354)		—		—		4,814
Multi-family real estate		6,806		(521)		(97)		—		6,188
Construction and land development		3,414		496		(289)		18		3,639
Agriculture real estate		2,567		(188)		—		—		2,379
Commercial and industrial		5,235		794		(185)		6		5,850
Agriculture production		782		(212)		—		—		570
Consumer		490		141		(208)		31		454
All other loans		21		(4)		—		—		17
Balance, end of period	$	47,820	$	3,492	$	(1,316)	$	88	$	50,084

	At period end and for the three months ended December 31, 2023
	Balance		Provision						Balance
	beginning		(benefit) charged		Losses				end
(dollars in thousands)	of period		to expense		charged off		Recoveries		of period
Allowance for credit losses on loans:
1-4 residential real estate	$	9,371	$	209	$	(6)	$	—	$	9,574
Non-owner occupied commercial real estate		16,504		591		(496)		—		16,599
Owner occupied commercial real estate		4,879		(65)		—		—		4,814
Multi-family real estate		6,097		91		—		—		6,188
Construction and land development		3,545		272		(178)		—		3,639
Agriculture real estate		2,426		(47)		—		—		2,379
Commercial and industrial		5,134		894		(180)		2		5,850
Agriculture production		697		(127)		—		—		570
Consumer		453		103		(120)		18		454
All other loans		16		1		—		—		17
Balance, end of period	$	49,122	$	1,922	$	(980)	$	20	$	50,084

The following tables present the balance in the allowance for off-balance sheet credit exposure based on portfolio segment as of December 31, 2024 and 2023, and activity in the allowance for the three- and six- month periods ended December 31, 2024 and 2023:

	At period end and for the six months ended December 31, 2024
	Balance		Provision		Balance
	beginning		(benefit) charged		end
(dollars in thousands)	of period		to expense		of period
Allowance for off-balance sheet credit exposure:
1-4 residential real estate	$	140	$	89	$	229
Non-owner occupied commercial real estate		153		32		185
Owner occupied commercial real estate		136		33		169
Multi-family real estate		31		34		65
Construction and land development		1,912		53		1,965
Agriculture real estate		60		(6)		54
Commercial and industrial		782		250		1,032
Agriculture production		37		90		127
Consumer		12		(6)		6
All other loans		—		—		—
Total	$	3,263	$	569	$	3,832

	At period end and for the three months ended December 31, 2024
	Balance		Provision		Balance
	beginning		(benefit) charged		end
(dollars in thousands)	of period		to expense		of period
Allowance for off-balance sheet credit exposure:
1-4 residential real estate	$	170	$	59	$	229
Non-owner occupied commercial real estate		175		10		185
Owner occupied commercial real estate		122		47		169
Multi-family real estate		34		31		65
Construction and land development		2,000		(35)		1,965
Agriculture real estate		52		2		54
Commercial and industrial		802		230		1,032
Agriculture production		34		93		127
Consumer		12		(6)		6
All other loans		—		—		—
Total	$	3,401	$	431	$	3,832

	At period end and for the six months ended December 31, 2023
	Balance		Provision		Balance
	beginning		(benefit) charged		end
(dollars in thousands)	of period		to expense		of period
Allowance for off-balance sheet credit exposure:
1-4 residential real estate	$	126	$	10	$	136
Non-owner occupied commercial real estate		154		(3)		151
Owner occupied commercial real estate		182		(7)		175
Multi-family real estate		16		(7)		9
Construction and land development		4,897		(1,718)		3,179
Agriculture real estate		50		(3)		47
Commercial and industrial		730		(2)		728
Agriculture production		107		50		157
Consumer		16		(2)		14
All other loans		10		(10)		—
Total	$	6,288	$	(1,692)	$	4,596

	At period end and for the three months ended December 31, 2023
	Balance		Provision		Balance
	beginning		(benefit) charged		end
(dollars in thousands)	of period		to expense		of period
Allowance for off-balance sheet credit exposure:
1-4 residential real estate	$	131	$	5	$	136
Non-owner occupied commercial real estate		154		(3)		151
Owner occupied commercial real estate		180		(5)		175
Multi-family real estate		15		(6)		9
Construction and land development		4,285		(1,106)		3,179
Agriculture real estate		39		8		47
Commercial and industrial		767		(39)		728
Agriculture production		23		134		157
Consumer		17		(3)		14
All other loans		7		(7)		—
Total	$	5,618	$	(1,022)	$	4,596

The following tables present year-to-date gross charge-offs by loan class and year of origination for the six-month periods ended December 31, 2024 and 2023:

													Revolving
(dollars in thousands)	2025		2024		2023		2022		2021		Prior		loans		Total
December 31, 2024
1-4 residential real estate	$	—	$	—	$	—	$	—	$	—	$	50	$	—	$	50
Owner occupied commercial real estate		—		—		122		—		—		—		—		122
Construction and land development		—		—		—		—		1		—		—		1
Commercial and industrial		—		16		38		—		—		11		—		65
Consumer		—		98		65		35		3		—		—		201
Total gross charge-offs	$	—	$	114	$	225	$	35	$	4	$	61	$	—	$	439

													Revolving
(dollars in thousands)	2024		2023		2022		2021		2020		Prior		loans		Total
December 31, 2023
1-4 residential real estate	$	—	$	—	$	6	$	—	$	—	$	35	$	—	$	41
Non-owner occupied commercial real estate		—		496		—		—		—		—		—		496
Multi-family real estate		—		—		—		97		—		—		—		97
Construction and land development		—		100		78		111		—		—		—		289
Commercial and industrial		—		5		180		—		—		—		—		185
Consumer		6		97		79		20		—		6		—		208
Total gross charge-offs	$	6	$	698	$	343	$	228	$	—	$	41	$	—	$	1,316

Credit Quality Indicators. The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on all loans at origination and is updated on a quarterly basis for loans risk rated Watch, Special Mention, Substandard, or Doubtful. In addition, lending relationships of $4 million or more, exclusive of any consumer or owner-occupied residential loan, are subject to an annual credit analysis which is prepared by the loan administration department and presented to a loan committee with appropriate lending authority. A sample of lending relationships in excess of $1 million (exclusive of single-family residential real estate loans) are subject to an independent loan review annually, in order to verify risk ratings. The Company uses the following definitions for risk ratings:

Watch – Loans classified as watch exhibit weaknesses that require more than usual monitoring. Issues may include deteriorating financial condition, payments made after due date but within 30 days, adverse industry conditions or management problems.

Special Mention – Loans classified as special mention exhibit signs of further deterioration but still generally make payments within 30 days. This is a transitional rating and loans should typically not be rated Special Mention for more than 12 months.

Substandard – Loans classified as substandard possess weaknesses that jeopardize the ultimate collection of the principal and interest outstanding. These loans exhibit continued financial losses, ongoing delinquency, overall poor financial condition, and insufficient collateral. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weaknesses of substandard loans, and have deteriorated to the level that there is a high probability of substantial loss.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be Pass rated loans.

A periodic review of selected credits (based on loan size and type) is conducted to identify loans with heightened risk or probable losses and to assign risk grades. The primary responsibility for this review rests with loan administration personnel. This review is supplemented with periodic examinations of both selected credits and the credit review process by the Company’s internal audit function and applicable regulatory agencies. The information from these reviews assists management in the timely identification of problems and potential problems and provides a basis for deciding whether the credit continues to share similar risk characteristics with collectively evaluated loan pools, or whether credit losses for the loan should be evaluated on an individual loan basis.

The following table presents the credit risk profile of the Company’s loan portfolio (excluding deferred loan fees) based on rating category and fiscal year of origination as of December 31, 2024. This table includes PCD loans, which are reported according to risk categorization after acquisition based on the Company’s standards for such classification:

													Revolving
(dollars in thousands)	2025		2024		2023		2022		2021		Prior		loans		Total
1-4 residential real estate
Pass	$	119,788	$	135,773	$	143,747	$	178,615	$	133,271	$	143,936	$	105,962	$	961,092
Watch		146		690		335		328		201		261		—		1,961
Special Mention		—		—		—		—		—		—		—		—
Substandard		954		494		30		682		565		1,170		248		4,143
Doubtful		—		—		—		—		—		—		—		—
Total 1-4 residential real estate	$	120,888	$	136,957	$	144,112	$	179,625	$	134,037	$	145,367	$	106,210	$	967,196
Non-owner occupied commercial real estate
Pass	$	51,464	$	98,905	$	224,508	$	283,746	$	84,796	$	80,202	$	8,198	$	831,819
Watch		5,071		1,770		15,454		202		1,510		1,378		—		25,385
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		42		25,238		—		—		—		25,280
Doubtful		—		—		—		—		—		—		—		—
Total Non-owner occupied commercial real estate	$	56,535	$	100,675	$	240,004	$	309,186	$	86,306	$	81,580	$	8,198	$	882,484
Owner occupied commercial real estate
Pass	$	37,467	$	56,609	$	87,988	$	84,846	$	79,371	$	54,046	$	20,179	$	420,506
Watch		606		1,071		6,614		1,151		148		1,156		500		11,246
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		1,802		—		930		—		425		483		3,640
Doubtful		—		—		—		—		—		—		—		—
Total Owner occupied commercial real estate	$	38,073	$	59,482	$	94,602	$	86,927	$	79,519	$	55,627	$	21,162	$	435,392
Multi-family real estate
Pass	$	44,151	$	19,603	$	147,791	$	77,287	$	71,706	$	14,418	$	1,125	$	376,081
Watch		—		—		—		—		—		—		—		—
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total Multi-family real estate	$	44,151	$	19,603	$	147,791	$	77,287	$	71,706	$	14,418	$	1,125	$	376,081
Construction and land development
Pass	$	113,678	$	82,003	$	157,946	$	27,040	$	2,322	$	2,375	$	1,892	$	387,256
Watch		4,949		—		—		124		—		69		—		5,142
Special Mention		—		—		—		—		—		—		—		—
Substandard		990		—		—		—		—		—		—		990
Doubtful		—		—		—		—		—		—		—		—
Total Construction and land development	$	119,617	$	82,003	$	157,946	$	27,164	$	2,322	$	2,444	$	1,892	$	393,388
Agriculture real estate
Pass	$	24,666	$	34,110	$	42,486	$	52,165	$	46,195	$	16,810	$	19,869	$	236,301
Watch		—		248		91		109		—		259		—		707
Special Mention		—		—		—		—		—		—		—		—
Substandard		35		2,312		281		—		276		—		—		2,904
Doubtful		—		—		—		—		—		—		—		—
Total Agriculture real estate	$	24,701	$	36,670	$	42,858	$	52,274	$	46,471	$	17,069	$	19,869	$	239,912
Commercial and industrial
Pass	$	98,595	$	86,134	$	50,804	$	37,339	$	20,757	$	8,098	$	174,451	$	476,178
Watch		3,988		200		847		37		255		16		804		6,147
Special Mention		—		—		—		—		—		—		—		—
Substandard		97		177		202		966		39		743		250		2,474
Doubtful		—		—		—		—		—		—		—		—
Total Commercial and industrial	$	102,680	$	86,511	$	51,853	$	38,342	$	21,051	$	8,857	$	175,505	$	484,799
Agriculture production
Pass	$	20,471	$	32,054	$	9,814	$	3,642	$	5,682	$	2,056	$	114,069	$	187,788
Watch		137		71		—		—		—		—		217		425
Special Mention		—		—		—		—		—		—		—		—
Substandard		38		—		4		—		17		12		—		71
Doubtful		—		—		—		—		—		—		—		—
Total Agriculture production	$	20,646	$	32,125	$	9,818	$	3,642	$	5,699	$	2,068	$	114,286	$	188,284

Consumer
Pass	$	17,680	$	17,925	$	12,255	$	4,614	$	1,438	$	271	$	1,754	$	55,937
Watch		—		—		—		—		—		—		—		—
Special Mention		—		—		—		—		—		—		—		—
Substandard		6		27		16		1		30		—		—		80
Doubtful		—		—		—		—		—		—		—		—
Total Consumer	$	17,686	$	17,952	$	12,271	$	4,615	$	1,468	$	271	$	1,754	$	56,017
All other loans
Pass	$	131	$	1,000	$	578	$	82	$	210	$	1,627	$	—	$	3,628
Watch		—		—		—		—		—		—		—		—
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total All other loans	$	131	$	1,000	$	578	$	82	$	210	$	1,627	$	—	$	3,628
Total Loans
Pass	$	528,091	$	564,116	$	877,917	$	749,376	$	445,748	$	323,839	$	447,499	$	3,936,586
Watch		14,897		4,050		23,341		1,951		2,114		3,139		1,521		51,013
Special Mention		—		—		—		—		—		—		—		—
Substandard		2,120		4,812		575		27,817		927		2,350		981		39,582
Doubtful		—		—		—		—		—		—		—		—
Total	$	545,108	$	572,978	$	901,833	$	779,144	$	448,789	$	329,328	$	450,001	$	4,027,181

The following table presents the credit risk profile of the Company’s loan portfolio (excluding deferred loan fees) based on rating category and fiscal year of origination as of June 30, 2024. This table includes PCD loans, which were reported according to risk categorization after acquisition based on the Company’s standards for such classification:

													Revolving
(dollars in thousands)	2024		2023		2022		2021		2020		Prior		loans		Total
1-4 residential real estate
Pass	$	167,734	$	157,530	$	195,002	$	142,721	$	66,292	$	92,728	$	99,365	$	921,372
Watch		877		289		87		396		98		23		—		1,770
Special Mention		—		—		—		—		—		—		—		—
Substandard		686		797		243		183		30		294		22		2,255
Doubtful		—		—		—		—		—		—		—		—
Total 1-4 residential real estate	$	169,297	$	158,616	$	195,332	$	143,300	$	66,420	$	93,045	$	99,387	$	925,397
Non-owner occupied commercial real estate
Pass	$	120,914	$	232,802	$	294,138	$	102,380	$	33,691	$	55,190	$	6,470	$	845,585
Watch		4,658		16,232		209		1,513		4,443		1,404		—		28,459
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		43		25,683		—		—		—		—		25,726
Doubtful		—		—		—		—		—		—		—		—
Total Non-owner occupied commercial real estate	$	125,572	$	249,077	$	320,030	$	103,893	$	38,134	$	56,594	$	6,470	$	899,770
Owner occupied commercial real estate
Pass	$	63,251	$	98,776	$	89,361	$	86,975	$	25,664	$	26,124	$	20,147	$	410,298
Watch		1,252		6,492		1,178		154		—		1,181		520		10,777
Special Mention		—		—		—		—		—		—		—		—
Substandard		3,233		—		2,199		—		—		428		541		6,401
Doubtful		—		—		—		—		—		—		—		—
Total Owner occupied commercial real estate	$	67,736	$	105,268	$	92,738	$	87,129	$	25,664	$	27,733	$	21,208	$	427,476
Multi-family real estate
Pass	$	36,518	$	157,471	$	86,171	$	77,545	$	21,438	$	5,341	$	80	$	384,564
Watch		—		—		—		—		—		—		—		—
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total Multi-family real estate	$	36,518	$	157,471	$	86,171	$	77,545	$	21,438	$	5,341	$	80	$	384,564
Construction and land development
Pass	$	104,162	$	143,538	$	27,524	$	4,379	$	3,887	$	679	$	1,518	$	285,687
Watch		652		2,906		131		—		—		—		—		3,689

Special Mention		—		—		—		—		—		—		—		—
Substandard		1,129		36		—		—		—		—		—		1,165
Doubtful		—		—		—		—		—		—		—		—
Total Construction and land development	$	105,943	$	146,480	$	27,655	$	4,379	$	3,887	$	679	$	1,518	$	290,541
Agriculture real estate
Pass	$	39,491	$	46,387	$	56,407	$	49,334	$	9,947	$	9,238	$	18,003	$	228,807
Watch		281		100		197		—		259		—		—		837
Special Mention		—		—		—		—		—		—		—		—
Substandard		2,265		281		—		283		—		—		47		2,876
Doubtful		—		—		—		—		—		—		—		—
Total Agriculture real estate	$	42,037	$	46,768	$	56,604	$	49,617	$	10,206	$	9,238	$	18,050	$	232,520
Commercial and industrial
Pass	$	116,173	$	60,404	$	43,205	$	43,879	$	3,145	$	4,863	$	174,181	$	445,850
Watch		1,031		250		43		—		—		228		404		1,956
Special Mention		—		—		—		—		—		—		—		—
Substandard		272		275		859		—		116		769		50		2,341
Doubtful		—		—		—		—		—		—		—		—
Total Commercial and industrial	$	117,476	$	60,929	$	44,107	$	43,879	$	3,261	$	5,860	$	174,635	$	450,147
Agriculture production
Pass	$	40,980	$	11,288	$	4,115	$	6,159	$	1,965	$	229	$	110,396	$	175,132
Watch		170		37		204		—		—		127		217		755
Special Mention		—		—		—		—		—		—		—		—
Substandard		5		23		9		17		—		27		—		81
Doubtful		—		—		—		—		—		—		—		—
Total Agriculture production	$	41,155	$	11,348	$	4,328	$	6,176	$	1,965	$	383	$	110,613	$	175,968
Consumer
Pass	$	30,317	$	17,318	$	6,547	$	2,268	$	467	$	54	$	2,683	$	59,654
Watch		—		—		—		—		—		—		—		—
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		3		11		3		—		—		—		17
Doubtful		—		—		—		—		—		—		—		—
Total Consumer	$	30,317	$	17,321	$	6,558	$	2,271	$	467	$	54	$	2,683	$	59,671
All other loans
Pass	$	1,139	$	644	$	122	$	217	$	43	$	1,816	$	—	$	3,981
Watch		—		—		—		—		—		—		—		—
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total All other loans	$	1,139	$	644	$	122	$	217	$	43	$	1,816	$	—	$	3,981
Total Loans
Pass	$	720,679	$	926,158	$	802,592	$	515,857	$	166,539	$	196,262	$	432,843	$	3,760,930
Watch		8,921		26,306		2,049		2,063		4,800		2,963		1,141		48,243
Special Mention		—		—		—		—		—		—		—		—
Substandard		7,590		1,458		29,004		486		146		1,518		660		40,862
Doubtful		—		—		—		—		—		—		—		—
Total	$	737,190	$	953,922	$	833,645	$	518,406	$	171,485	$	200,743	$	434,644	$	3,850,035

Past-due Loans. The following tables present the Company’s loan portfolio aging analysis (excluding deferred loan fees) as of December 31, 2024 and June 30, 2024. These tables include PCD loans, which are reported according to aging analysis after acquisition based on the Company’s standards for such classification:

	December 31, 2024
					Greater Than								Greater Than 90
	30-59 Days		60-89 Days		90 Days		Total				Total Loans		Days Past Due
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Receivable		and Accruing
1-4 residential real estate	$	841	$	1,777	$	2,863	$	5,481	$	961,715	$	967,196	$	—
Non-owner occupied commercial real estate		—		64		—		64		882,420		882,484		—
Owner occupied commercial real estate		1,225		89		143		1,457		433,935		435,392		—
Multi-family real estate		—		—		—		—		376,081		376,081		—
Construction and land development		299		31		—		330		393,058		393,388		—
Agriculture real estate		—		—		1,825		1,825		238,087		239,912		—
Commercial and industrial		1,221		541		1,676		3,438		481,361		484,799		—
Agriculture production		55		60		—		115		188,169		188,284		—
Consumer		456		112		74		642		55,375		56,017		—
All other loans		—		—		—		—		3,628		3,628		—
Total loans	$	4,097	$	2,674	$	6,581	$	13,352	$	4,013,829	$	4,027,181	$	—

	June 30, 2024
					Greater Than								Greater Than 90
	30-59 Days		60-89 Days		90 Days		Total				Total Loans		Days Past Due
(dollars in thousands)	Past Due		Past Due		Past Due		Past Due		Current		Receivable		and Accruing
1-4 residential real estate	$	890	$	2,087	$	664	$	3,641	$	921,756	$	925,397	$	—
Non-owner occupied commercial real estate		107		—		—		107		899,663		899,770		—
Owner occupied commercial real estate		305		—		1,060		1,365		426,111		427,476		—
Multi-family real estate		—		—		—		—		384,564		384,564		—
Construction and land development		251		377		—		628		289,913		290,541		—
Agriculture real estate		573		—		35		608		231,912		232,520		—
Commercial and industrial		641		83		1,335		2,059		448,088		450,147		—
Agriculture production		50		—		344		394		175,574		175,968		—
Consumer		311		74		14		399		59,272		59,671		—
All other loans		—		—		—		—		3,981		3,981		—
Total loans	$	3,128	$	2,621	$	3,452	$	9,201	$	3,840,834	$	3,850,035	$	—

At December 31, 2024, there were three PCD loans totaling $558,000 greater than 90 days past due, compared to one PCD loan totaling $560,000 that was greater than 90 days past due at June 30, 2024.

Loans that experience insignificant payment delays and payment shortfalls generally are not adversely classified or determined to not share similar risk characteristics with collectively evaluated pools of loans for determination of the ACL estimate. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Significant payment delays or shortfalls may lead to a determination that a loan should be individually evaluated for estimated credit losses.

Collateral Dependent Loans. The following tables present the Company’s collateral dependent loans and related ACL at December 31, 2024, and June 30, 2024:

											Allowance on
(dollars in thousands)	Commercial		Residential		Construction and						Collateral
December 31, 2024	Real Estate		Real Estate		Land Development		Other		Total		Dependent Loans
1-4 residential real estate	$	—	$	784	$	—	$	—	$	784	$	103
Non-owner occupied commercial real estate		23,099		—		—		—		23,099		3,604
Owner occupied commercial real estate		543		—		—		—		543		208
Construction and land development		—		—		961		—		961		—
Commercial and industrial		—		—		—		2,386		2,386		827
Total loans	$	23,642	$	784	$	961	$	2,386	$	27,773	$	4,742

											Allowance on
(dollars in thousands)	Commercial		Residential		Construction and						Collateral
June 30, 2024	Real Estate		Real Estate		Land Development		Other		Total		Dependent Loans
1-4 residential real estate	$	—	$	797	$	—	$	—	$	797	$	116
Non-owner occupied commercial real estate		23,457		—		—		—		23,457		10,175
Commercial and industrial		—		—		—		2,705		2,705		635
Total loans	$	23,457	$	797	$	—	$	2,705	$	26,959	$	10,926

Nonaccrual Loans. The following table presents the Company’s amortized cost basis of nonaccrual loans segmented by class of loans at December 31, 2024, and June 30, 2024. The table excludes performing modifications to borrowers experiencing financial difficulty.

(dollars in thousands)	December 31, 2024		June 30, 2024
1-4 residential real estate	$	3,404	$	1,391
Owner occupied commercial real estate		281		1,102
Construction and land development		97		108
Agriculture real estate		1,825		1,896
Commercial and industrial		2,339		1,703
Agriculture production		286		461
Consumer		77		19
Total loans	$	8,309	$	6,680

At December 31, 2024, there were no nonaccrual loans individually evaluated for which no ACL was recorded. Interest income recognized on nonaccrual loans in the three- and six- month periods ended December 31, 2024 and 2023, was immaterial.

Modifications to Borrowers Experiencing Financial Difficulty. During the three- and six- month periods ended December 31, 2024, there were no loan modifications made for borrowers experiencing financial difficulty. During the three- and six- month periods ended December 31, 2023, two loan modifications, totaling $867,000, were made to commercial loans for borrowers experiencing financial difficulty. Loans classified as modifications to borrowers experiencing financial difficulty outstanding at December 31, 2023 are shown in the following table segregated by portfolio segment and type of modification. The percentage of amortized cost of loans that were modified compared to total outstanding loans is also presented below.

	December 31, 2023
					Term		Interest		Total Class of
	Principal		Payment		Extension		Rate		Financing
	Forgiveness		Delays		Modifications		Reduction		Receivable
(dollars in thousands)
1-4 residential real estate	$	—	$	—	$	—	$	—	—	%
Non-owner occupied commercial real estate		—		—		—		—	—	%
Owner occupied commercial real estate		—		—		—		—	—	%
Multi-family real estate		—		—		—		—	—	%
Construction and land development		—		—		—		—	—	%
Agriculture real estate		—		—		—		—	—	%
Commercial and industrial		—		867		—		—	0.19	%
Agriculture production		—		—		—		—	—	%
Consumer		—		—		—		—	—	%
All other loans		—		—		—		—	—	%
Total	$	—	$	867	$	—	$	—	0.02	%

Both loan modifications made during fiscal 2024 were more than 90 days past due, and were classified as substandard, at December 31, 2023. Both of these loans defaulted in fiscal 2024. For modifications to loans made to borrowers experiencing financial difficulty that are adversely classified, the Company determines the allowance for credit losses on an individual basis, using the same process that it utilizes for other adversely classified loans.

Residential Real Estate Foreclosures. The Company may obtain physical possession of real estate collateralizing a residential mortgage loan or home equity loan via foreclosure or in-substance repossession. As of December 31, 2024 and June 30, 2024, the carrying value of foreclosed residential real estate properties as a result of obtaining physical possession was $0 and $74,000, respectively. In addition, as of December 31, 2024, and June 30, 2024, the Company had residential mortgage loans and home equity loans with a carrying value of $92,000 and $193,000, respectively, collateralized by residential real estate property for which formal foreclosure proceedings were in process.